Accounting consists of measuring, taking record of, and communicating the financial data concerning operations relative to the financing, the investments and the running of a business or enterprise. The communication of the information is typically done via financial reports, which are an outcome of the accounting process. The purpose of financial reports is to provide pertinent information for the making of decisions concerning the optimal operation of a business. The presentation should have enough detail to minimize errors, and should include complementary notes and additional information necessary for a complete and faithful representation of the financial situation of a business at a precise date. It should also provide for a comprehensive picture of the business productivity for a given period of time. This presentation can vary according to the needs of the reader such as creditors, investors, shareholders, directors, governments, employees, and the general public as well as according to the type of business and industry. In many instances a user desires a customized financial report.
Accounting software systems usually output an informal draft or only a portion of a financial report which can be used, for example, by the directors. The income statement and/or the balance sheet must typically be used without the complementary notes and the additional information, therefore limiting the usefulness of the statement. The user is also limited by the accounting software's rigid framework, which is pre-established, fixed and limits the user to one type of presentation. Also, the consultation of these financial reports on a screen or display is typically limited to the report itself and the user is unable to find the source of the information.
For clarification purposes, it is useful to understand the differences between building financial statements and general bookkeeping, as preparing financial reports is a distinct and subsequent process to bookkeeping. The preparation of financial reports is a much more involved and regulated task as compared to bookkeeping.
The structure of most present accounting systems is based upon the setup of the Chart of Accounts, wherein the Chart of Accounts is the master list of all Accounts. For example, a typical bookkeeping software product allows for the creation and maintenance of a chart of accounts, entering of transactions, and the printing of reports—one step after the other. By way of example, one of these systems output the ‘Balance Sheet’ and the ‘Income Statement’ which are identified as “Financial Statements”, via the controlled sequential printing of this master list of accounts with account balances (the trial balance) along with the addition of sequential fictional accounts. These state of the art accounting software applications, thus requires a pre-defined chart of accounts in order to function. Any data that is imported within these systems require the structure according to the established chart of accounts in order to be processed. In some systems, the user builds the chart of account and creates the structure.
One advantage of such accounting financial statements is that they are integrated with the accounting system, such that a modification in the data of the accounting system automatically modifies the financial report. Some report generators offer more flexibility but typically less integration. The generators become more and more complex as they attempt to be less rigid and more integrated because the computer designers lack a comprehension of the field of accounting and the requirements of the accounting field.
In the accounting industry, accountants typically receive accounting data in different forms and produced by different products. And, the accounting person has to take the accounting data and prepare financial reports, typically starting with the trial balance resulting from the bookkeeping process, making adjustments to account balances in accordance with the generally accepted accounting principles (GAAP), preparing financial reports by performing the grouping of accounts into financial statement items to be presented under categories of items, and generating reports and financial reports by hand. A word processor is then often used to produce final and complete financial reports along with explanations such as auditor's report. And, the word processor typically has no integration with the accounting data of the accounting system. While the industry is replete with products and tools for bookkeeping, there were no universal tools offering the flexibility and capacities of a word processor while integrating accounting data, to perform such processes and facilitate the work done by accounting persons such as accountants, financial officers, and auditors.
What is needed is a universal tool that would allow reading of any type of accounting data and easily manipulate that data into some type of financial report. This would allow an accounting person to read data from any of the bookkeeping software packages and easily derive any financial reports. It would therefore be useful and innovative if the knowledge about accounting and the operation of computers would be unified to produce a tool which enables accounting systems and word processing applications to create all kinds of financial reports tailored to the needs of the user, in a simple way, and without following a rigid framework. The processing and the integration with the accounting data of such a system would permit tailored financial reports.